What Factors Affect the Value of a Home?

Two homes with the same features can carry very different values in different neighbourhoods. Proximity to the city centre, transport lines, schools and hospitals, and how developed and safe the surroundings are, are the main location factors that determine a home's value.

Assessing location does not stop at the neighbourhood level; the street, the building and even the direction the apartment faces make a difference. An apartment on a main road can be a disadvantage for some buyers because of noise, and an advantage for others for transport reasons. The expert also takes the area's buyer profile into account. In addition, developments such as planned urban transformation nearby and new road and rail system investments can create expectations; however, only developments that are confirmed and concrete are reflected in the value, and then with caution.

Gross and net area, number of rooms, the floor it is on, orientation and view, additional areas such as a balcony, and the building's age and condition all affect value. A new and well-maintained building generally carries a higher value, while value may fall in an old and neglected one.

The building's compliance with the earthquake regulation and the condition of the ground are also important factors taken into account in a valuation.

The floor layout also affects buyer preference: in some areas upper floors are preferred for the view, in others ground and garden floors are preferred for the use of the garden. Ground floors and top floors may see lower demand in buildings without a lift. The expert reads these preferences from actual sales in the area, not from general belief.

The building and complex an apartment is in determine value as much as the apartment itself. A lift, parking, security, green space, social facilities, thermal insulation and the upkeep of common areas affect the price a buyer is willing to pay. The level of the service charge should not be overlooked either: of two similar apartments, the one with a noticeably higher service charge may look less attractive to a buyer.

The heating system (central, combi boiler, underfloor heating), energy efficiency, the condition of wet areas such as the kitchen and bathroom, and the quality of windows and frames are also part of the physical assessment. During the inspection, the expert sees these factors on site and makes adjustments by comparing with comparable homes. For this reason, a valuation is not a calculation based only on title deed and listing information, but an on-site inspection process.

Encumbrances in the title deed record (such as a mortgage, attachment or annotation), the existence of an occupancy permit and conformity with the zoning status affect a home's value and how easily it can be sold. A home with no occupancy permit or one built contrary to its project may be valued lower than similar ones.

The difference between condominium easement and condominium ownership is also important: an apartment whose structure is complete but which still stands on a condominium easement may require extra steps in loan and transfer transactions. Shared ownership, a mismatch between the intended use in the title deed and actual use (for example, a place that appears to be residential being used as a workplace) and restrictions in the management plan can also affect value. For this reason, a current copy of the title deed record should be obtained at the start of the valuation.

A valuation is based on data on similar homes that have recently been sold or listed. General market conditions such as interest rates, loan conditions and the balance of supply and demand in the area also cause value to change over time. For this reason, valuation reports show the value on a particular date.

In periods when market fluctuations are high, the dates of comparables become even more important; an old sale may not reflect today's value. For this reason, the expert chooses comparables as recent and as similar in nature as possible, and adjusts separately for any difference in date.

Because comparable homes are not exactly the same as the home being valued, the expert adjusts each comparable through comparison. If a comparable is in a newer building, on a higher floor or has a larger area, the difference is deducted from or added to the value. Adjustments can be made as a percentage or as an amount; what matters is that the reasoning for each adjustment can be traced in the report. In the end, the values obtained from several comparables are weighed to arrive at a single value.

A hypothetical example: if a comparable apartment is one floor higher than the apartment being valued and has also been recently renovated, these two advantages are deducted from the comparable's sale price before the comparison is made. Since figures vary by area, no fixed rate can be given here.

The seller should check in advance the encumbrances in the title deed, the occupancy permit, whether there is any service charge debt and whether the square metre information matches the title deed. The buyer should research the age of the building, information on building inspection and earthquake status, shared expenses and planned transformation or road works nearby. When these checks are done before the valuation, the report is prepared faster and more completely.

Although value is a single number, there is a reasonable range around it. The difference between the listing price and the report value usually arises from room for negotiation, a wish to sell quickly or differences in the choice of comparables.

Factors that raise value include proximity to the centre and transport, a well-kept and new building, a large and well-planned apartment, a view and additional amenities (parking, security, social facilities). Factors that lower value are a neglected building, a noisy or unsafe environment, occupancy permit or title deed problems and a structure that does not comply with the earthquake regulation.

These factors do not work independently of one another. For example, a good location may not make its expected contribution to value if the building is neglected or has no occupancy permit. The expert evaluates the factors not one by one but within the whole of the property, and adjusts for each difference separately when comparing with comparables.

Small repairs and maintenance work such as painting improve the home's first impression. Putting the title deed, occupancy permit and service charge debt situation in order builds trust with the buyer. Consulting a valuation expert before starting large renovations helps you see how much the investment will be reflected in the value.

Keep in mind that a renovation does not always add value equal to the amount spent. Work such as renovating the kitchen and bathroom can improve the home's saleability, but a luxury renovation that exceeds the home price level of the area often does not earn a return in the same proportion.

The expert first sees the property on site: the apartment's area, room layout, floor, orientation, interior condition, the general upkeep of the building and its surroundings are examined. Then documents such as the title deed and the occupancy permit are checked; encumbrances, zoning conformity and building permits form the basis of value.

The next step is comparable research. Homes in the same area and of a similar nature that have recently been sold or listed are collected. Because the comparables are not exactly the same, each is adjusted for differences in area, floor, age, condition and location. The values that emerge after these adjustments form a consistent range, and the expert gives more weight to the comparables closest to the apartment being valued.

The apartment's own particular features, for example being a middle floor, facing a blocked side or having an open parking space in addition, are a separate matter of assessment. For this reason, the estimates given by online price calculators can be a guide, but they do not replace the documented value from an expert who has carried out an on-site inspection.